Annual insurance is 1,000 face value.
company A is 1.86
company B is 1.86
company C is 2.07
company D is 2.25

Because Aaron, age 32, is a smoker, he must pay more for life insurance. Given that Company A charges 20% more for smokers, Company B charges 18% more for smokers, Company C charge 25% more for smokers and Company D charges 15% more for smokers, Aaron decides to buy his $250,000 policy from Company B. Which of the following statements is true?

a.
Aaron is paying the smallest premium possible with Company B.
b.
Aaron is paying $93 more in premiums than he would with Company A.
c.
Aaron is paying $129 more in premiums than he would with Company C.
d.
Aaron could have chosen any company because the premiums are all the same.

ANSWER WAS A

Based on the given information above about the annual insurance of Aaron, the statement that is considered true would be option A. Aaron is paying the smallest premium possible with Company B since Company B only charges 18% more for smokers. Hope this is the answer that you are looking for.

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throwdolbeau throwdolbeau · Answer 2 · 2019-01-09T12:02:17+01:00

Answer:

The correct answer is A.

Step-by-step explanation:

Premium for Company A :

face value = 1.86 , charges are 20% more for smokers

⇒ Charges = 20% of 250000 = $50000

Total charge = Charge × face value

= 50000 × 1.86 = $93000

Premium for Company B :

face value = 1.86 , charges are 18% more for smokers

⇒ Charges = 18% of 250000 = $45000

Total charge = Charge × face value

= 45000 × 1.86 = $83700

Premium for Company C :

face value = 2.07 , charges are 25% more for smokers

⇒ Charges = 25% of 250000 = $62500

Total charge = Charge × face value

= 62500 × 2.07 = $129375

Premium for Company D :

face value = 2.25 , charges are 15% more for smokers

⇒ Charges = 15% of 250000 = $37500

Total charge = Charge × face value

= 37500 × 2.25 = $84375

Hence, The option A. is correct that is Aaron is paying the smallest premium possible with company B